1
EXHIBIT 1.2
▇▇▇▇▇▇▇ & ▇▇▇
D R A F T
2/3/98
BROOKLYN HEIGHTS BANCORP
(a Federal Corporation)
529,000 Shares
(Subject to Increase Up to 608,350 Shares)
COMMON STOCK ($1.00 Par Value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
February __, 1998
▇▇▇▇, ▇▇▇▇ & Co., Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Brooklyn Heights Bancorp (the "Holding Company"), Atlantic Liberty,
M.H.C. (the "MHC") and Atlantic Liberty Savings, F.A. (the "Association")
(collectively, the "Primary Parties") hereby confirm, jointly and severally,
their agreement with ▇▇▇▇, ▇▇▇▇ & Co., Inc. (the "Agent"), as follows:
SECTION 1. THE OFFERING. The Holding Company is offering up to
529,000 shares of common stock, par value $1.00 per share (the "Common Stock")
(subject to an increase up to 608,350 shares), in (i) a subscription offering
(the "Subscription Offering"), and, if necessary, (ii) a direct community
offering (the "Direct Community Offering") and (iii) a syndicated community
offering (the "Syndicated Community Offering"), in connection with the
conversion and reorganization of the Association from a mutual savings
association to a stock savings association and wholly-owned subsidiary of the
Holding Company (the "Reorganization"), all pursuant to the Plan of
Reorganization from a Mutual Savings Association to Mutual Stock Holding
Company and Agreement and Stock Issuance Plan (the "Plan"). References to the
Association herein shall include the Association in its current mutual form or
post-Reorganization stock form as a wholly-owned subsidiary of the Holding
Company. Pursuant to the Plan, the Reorganization will be effected as follows:
(i) the Association will organize an interim stock savings
bank as a wholly-owned subsidiary ("Interim One");
(ii) Interim One will organize an interim stock savings bank
as a wholly-owned subsidiary ("Interim Two");
1
2
(iii) Interim One will organize the Holding Company as a
wholly-owned subsidiary;
(iv) the Association will amend its charter to read in the
form of a federal stock savings association charter, and Interim One will
become the MHC by exchanging its charter for a federal mutual holding company
charter;
(v) simultaneously with step (vi), Interim Two will merge
with and into the Association, and the Association will be the surviving
institution;
(vi) all of the Association's issued and outstanding stock
will be transferred to the MHC in exchange for membership interests in the MHC;
(vii) the MHC will contribute all of the Association's issued
and outstanding stock to the Holding Company, and the Association will become a
wholly-owned subsidiary of the Holding Company; and
(viii) the Holding Company will offer and sell shares of its
Common Stock (the "Conversion Shares" or "Shares") in the Subscription
Offering, Direct Community Offering, and Syndicated Community Offering
(collectively, the "Conversion Offerings" or "Offering") so that, upon
completion of the Conversion Offerings, the purchasers of Conversion Shares in
the Conversion Offerings will own 46% of the outstanding Common Stock and the
MHC will own 54% of the outstanding Common Stock. The Holding Company will
issue the Shares at a purchase price of $10.00 per share (the "Purchase
Price"). If the number of Conversion Shares is increased or decreased in
accordance with the Plan, the term "Shares" shall mean such greater or lesser
number, where applicable.
In the Subscription Offering, non-transferable rights to subscribe for
between 391,000 and 529,000 shares (subject to an increase up to 608,350
shares) of the Common Stock ("Subscription Rights") will be granted, in the
following priority: (1) the Association's depositors with account balances of
$50.00 or more as of June 30, 1996 ("Eligible Account Holders"); (2) the
Association's tax-qualified Employee Stock Ownership Plan ("ESOP"); (3) the
Association's depositors with account balances of $50.00 or more as of December
31, 1997 ("Supplemental Eligible Account Holders"); (4) depositors (other than
Eligible Account Holders and Supplemental Eligible Account Holders) and
borrowers of the Association as of ____________, 1998 (the "Voting Record
Date") (collectively, "Other Members") and (5) employees, officers and
directors of the Association, subject to the priorities and purchase
limitations set forth in the Plan. The Holding Company may offer all shares of
Common Stock offered but not subscribed for in the Subscription Offering, if
any, in the Direct Community Offering to members of the general public, with
first preference given to residents of Brooklyn, New York. In
2
3
the event a Direct Community Offering is held, it may be held at any time
during or immediately after the Subscription Offering. Depending on market
conditions, shares not subscribed for in the Subscription Offering or purchased
in the Direct Community Offering may be offered in the Syndicated Community
Offering to eligible members of the general public on a best efforts basis by
approved broker-dealer firms ("Assisting Brokers") which are members of the
National Association of Securities Dealers, Inc. ("NASD").
The Holding Company has filed with the U.S. Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2 (File No.
333-43591) in order to register the Shares under the Securities Act of 1933, as
amended (the "1933 Act"), and has filed such amendments thereto as have been
required to the date hereof (the "Registration Statement"). The prospectus, as
amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the "Prospectus," except that if any prospectus
is filed by the Holding Company pursuant to Rule 424(b) or (c) of the
regulations of the Commission under the 1933 Act differing from the prospectus
included in the Registration Statement at the time it initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant
to Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and
after their dates of effectiveness or use, respectively.
In connection with the Reorganization, the Association filed with the
Office of Thrift Supervision, Department of the Treasury (the "OTS"), pursuant
to Title 12, Parts 575 and 563b of the Code of Federal Regulations (the "MHC
Regulations"), a Notice of Mutual Holding Company Reorganization and
Application for Approval of an Issuance by a Subsidiary of a Mutual Holding
Company, including exhibits and the Prospectus, and has filed amendments
thereto as required by the OTS (as so amended, the "MHC Notice and
Application"). The Holding Company filed with the OTS its application on Form
H-(e)1 (the "Holding Company Application") to acquire the Association under the
Home Owners Loan Act, as amended, and the regulations promulgated thereunder
("HOLA"). The Association's application with the OTS for approval of the
formation of Interim Two and the merger of Interim Two with and into the
Association (the "Merger Application") was filed as an exhibit to the Holding
Company Application. The MHC Notice and Application and the Holding Company
Application (including the Merger Application) shall collectively be
hereinafter referred to as the "OTS Applications."
SECTION 2. APPOINTMENT OF THE AGENT. Subject to the terms and
conditions of this Agreement, the Primary Parties hereby appoint Agent as their
financial advisor and marketing agent to utilize its best efforts to solicit
subscriptions for the Conversion Shares and to advise and assist the Primary
Parties
3
4
with respect to the sale of the Conversion Shares in the Conversion Offerings.
On the basis of the representations and warranties of the Primary
Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to consult with and
advise MHC, the Holding Company and the Association as to the matters set forth
in the letter agreement ("Letter Agreement"), dated July 28, 1997, between the
Association and Agent (a copy of which is attached hereto as Exhibit A). It is
acknowledged by the Primary Parties that the Agent shall not be obligated to
purchase any Shares and shall not be obligated to take any action which is
inconsistent with any applicable law, regulation, decision or order.
Subscriptions for Conversion Shares will be offered by means of order forms as
described in the Prospectus. Except as provided in the paragraph below, the
appointment of the Agent hereunder shall terminate upon consummation of the
Offerings.
If selected broker-dealers are used to assist in the sale of
Conversion Shares in the Syndicated Community Offering, the Primary Parties
hereby appoint, subject to the terms and conditions of this Agreement, Agent to
manage such broker-dealers in the Syndicated Community Offering. On the basis
of the representations and warranties of the Primary Parties contained in, and
subject to the terms and conditions of, this Agreement, Agent accepts such
appointment and agrees to manage the selling group of broker-dealers in the
Syndicated Community Offering.
Agent agrees to make available to the Association, MHC and the Holding
Company for a period of 18 months following the consummation of the
Reorganization its Strategic Advisory Services ("STARS") program. If the
Association elects to participate in the STARS program, the Agent will meet
with the Association at its request and will render general advice on the
financial matters listed in Section 9 of the Letter Agreement (but not
including (i) any in-depth merger and acquisition analyses or studies which are
available under Agent's normal fee schedule, or (ii) advice with respect to a
specific acquisition transaction by, or sale of, the Association or the Holding
Company). If the Association elects to participate in the STARS program, the
Agent will waive the regular retainer fee and hourly charges for the first 18
months of such participation. The Association would be required, however, to
reimburse Agent for its reasonable out-of-pocket expenses incurred in
conjunction with the performance of these services. Such out-of-pocket
expenses include travel (coach class only), legal and other miscellaneous
expenses. Agent would not be permitted to incur any single expense in excess
of $1,000 pursuant to this paragraph without the prior approval of the
Association. If negotiations for a transaction conducted during the 18-month
participation period result in the execution of a definitive agreement and/or
consummation of a transaction for which Agent customarily would be entitled to
a fee for its advisory or other investment banking
4
5
services, Agent shall receive a contingent advisory fee in accordance with the
terms of a separate engagement letter to be entered into with respect to such
transaction. Nothing in this Agreement shall require the Holding Company or
the Association to obtain such financial advisory services from Agent. After
the completion of such 18-month participation period, if the parties wish to
continue the relationship, a fee will be negotiated and an agreement with
respect to specific advisory services will be entered into at that time.
SECTION 3. REFUND OF PURCHASE PRICE. In the event that the
Reorganization is not consummated for any reason, including but not limited to
the inability to sell the Conversion Shares during the Offerings (including any
permitted extension thereof), this Agreement shall terminate and any persons
who have subscribed for any of the Conversion Shares shall have refunded to
them the full amount which has been received from such person, together with
interest at the Association's current passbook rate, from the date payment is
received as provided in the Prospectus. Upon termination of this Agreement,
neither the Agent nor the Primary Parties shall have any obligation to the
other except that (i) the Primary Parties shall remain liable for any amounts
due pursuant to Sections 4(a), 8, 10 and 11 hereof, unless the transaction is
not consummated due to the breach by the Agent of a warranty, representation or
covenant; and (ii) the Agent shall remain liable for any amount due pursuant to
Sections 10 and 11 hereof, unless the transaction is not consummated due to the
breach by the Primary Parties of a warranty, representation or covenant.
SECTION 4. FEES. In addition to the expenses specified in Section 8
hereof, as compensation for the Agent's services under this Agreement, the
Agent has received or will receive the following fees from the Primary Parties:
(a) An initial fee in the amount of $25,000. Such fee
has been earned and paid in full.
(b) A marketing and advisory fee of $120,000. In the
event fees are paid pursuant to this subsection (b), such fees shall be paid in
lieu of, and not in addition to, payments to the Agent pursuant to subsection
(a).
(c) A fee not to exceed 5.5% of the aggregate Purchase
Price of the Conversion Shares sold by Assisting Brokers in any Syndicated
Community Offering. The Agent will pay the Assisting Brokers that assist in
the purchase of Conversion Shares in the Syndicated Community Offering a fee
competitive with gross underwriting discounts charged at such time for
comparable amounts of stock sold at a comparable price per share in a similar
market environment. The decision to utilize Assisting Brokers will be made
jointly by the Agent on the one hand, and the Primary Parties, on the other
hand, and it is agreed that
5
6
Agent will manage the Assisting Brokers in the Syndicated Offering.
SECTION 5. CLOSING. If the minimum number of Conversion Shares
permitted to be sold in the Reorganization on the basis of the most recently
updated Appraisal (as defined in Section 6(h)) are subscribed for at or before
the termination of the Offerings, and the other conditions to the completion of
the Reorganization are satisfied, the Holding Company agrees to issue the
Shares on the Closing Date (as hereinafter defined) against payment therefor by
the means authorized by the Plan and to deliver certificates evidencing
ownership of the Conversion Shares in such authorized denominations and
registered in such names as may be indicated on the subscription order forms
directly to the purchasers thereof as promptly as practicable after the Closing
Date. The Closing shall be held at the offices of special counsel to the
Primary Parties, or at such other place as shall be agreed upon among the
Primary Parties and the Agent, at 10:00 a.m. on a business day selected by the
Holding Company which business day shall be no less than two business days
following the giving of prior notice by the Holding Company to the Agent or at
such other time as shall be agreed upon by the Primary Parties and the Agent.
At the Closing, the Primary Parties shall deliver to the Agent in same-day
funds the commissions, fees and expenses owing to the Agent as set forth in
Sections 4 and 8 hereof and the opinions required hereby and other documents
deemed reasonably necessary by the Agent shall be executed and delivered to
effect the sale of the Shares as contemplated hereby and pursuant to the terms
of the Prospectus. The Holding Company shall notify the Agent when funds shall
have been received for the minimum number of shares of the Common Stock. The
date upon which the Holding Company shall release the Conversion Shares for
delivery in accordance with the terms hereof is referred to herein as the
"Closing Date."
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PRIMARY PARTIES. The
Primary Parties jointly and severally represent and warrant to the Agent that:
(a) The Primary Parties have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the Shares as provided herein and as described in the Prospectus. The
consummation of the Reorganization, the execution, delivery and performance of
this Agreement and the consummation of the transactions herein contemplated
have been duly and validly authorized by all necessary corporate action on the
part of the Primary Parties and this Agreement has been validly executed and
delivered by the Primary Parties and, assuming valid execution and delivery by
the Agent, is the valid, legal and binding agreement of the Primary Parties
enforceable in accordance with its terms, except to the extent, if any, that
the provisions of Sections 10 and 11 hereof may be unenforceable as against
public
6
7
policy, and except to the extent that such enforceability may be limited by
bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of savings institutions
insured by the FDIC (including the laws relating to the rights of the
contracting parties to equitable remedies).
(b) The Plan has been approved by the OTS.
(c) The Registration Statement was declared effective by
the Commission on February __, 1998; and no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or to the best
knowledge of the Primary Parties threatened by the Commission. At the time the
Registration Statement, including the Prospectus contained therein (including
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the requirements of
the 1933 Act and the regulations promulgated thereunder and the Registration
Statement, including the Prospectus contained therein (including any amendment
or supplement thereto), any Blue Sky Application or any Sales Information (as
such terms are defined in Section 10 hereof) authorized by the Primary Parties
for use in connection with the Offerings did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and at the time any Rule 424(b) or
(c) Prospectus was filed with the Commission and at the Closing Date referred
to in Section 5, the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any Blue Sky
Application or any Sales Information authorized by the Primary Parties for use
in connection with the Offerings will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the representations and warranties in
this Section 6(c) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the Primary
Parties by the Agent expressly regarding the Agent for use under the captions
"Market for the Common Stock" and "The Reorganization and Offering -- Marketing
Agent" and "-- Selected Dealers," or written statements or omissions from any
sales information or information filed pursuant to state securities or blue sky
laws or regulations regarding the Agent.
(d) The MHC Notice and Application, including the
Prospectus, was approved by the OTS on February __, 1998; and the Proxy
Statement of the Association relating to the special meeting of the members of
the Association at which the Plan shall be considered for approval by the
Association's eligible voting members (the "Proxy Statement"), was authorized
for use by the OTS on February __, 1998. At the time of the approval of the
MHC
7
8
Notice and Application, including the Prospectus, by the OTS (including any
amendment or supplement thereto) and at all times subsequent thereto until the
Closing Date, the MHC Notice and Application, including the Prospectus, did and
will comply as to form in all material respects with the MHC Regulations and
any other applicable rules and regulations of the OTS (except as modified or
waived in writing by the OTS). At the time of the approval of the MHC Notice
and Application, and as of the date of this Agreement, the MHC Notice and
Application, including the Prospectus (including any amendment or supplement
thereto), did not and does not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that representations or
warranties in this subsection (d) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Primary Parties by the Agent expressly regarding the Agent for use in the
Prospectus contained in the Application for Conversion under the captions
"Market for the Common Stock" and "The Conversion -- Marketing Agent" and
"-- Selected Dealers" or written statements or omissions from any sales
information or information filed pursuant to state securities or blue sky laws
or regulations regarding the Agent.
(e) No order has been issued by the OTS, the Commission,
or any state regulatory authority, preventing or suspending the use of the
Prospectus and no action by or before any such government entity to revoke any
approval, authorization or order of effectiveness related to the Reorganization
is pending or, to the best knowledge of the Primary Parties, threatened.
(f) The Plan has been duly adopted by the Board of
Directors of the Association. To the best knowledge of the Primary Parties, no
person has, or at the Closing Date will have, sought to obtain review of the
final action of the OTS in approving the Plan, the Reorganization, or the OTS
Applications, pursuant to the HOLA or any other statute or regulation.
(g) The Holding Company has filed with the OTS the
Holding Company Application (including the Merger Application) and the OTS has
approved of the Holding Company's acquisition of the Association.
(h) ▇▇▇▇▇▇▇ Financial Advisors, Inc., which prepared the
appraisal of the aggregate pro forma market value of the Holding Company and
the Association on which the Offerings were based (the "Appraisal"), has
advised the Primary Parties in writing that it is independent with respect to
each of the Primary Parties within the meaning of the Conversion Regulations.
(i) ▇▇▇ ▇▇▇▇▇ & Co., which certified the financial
statements filed as part of the Registration Statement and the
8
9
MHC Notice and Application, has advised the Primary Parties in writing that it
is, with respect to each of the Primary Parties, an independent certified
public accountant within the meaning of 12 C.F.R. Sections 563c.3 and
571.2(c)(3) and under the 1933 Act and the regulations promulgated thereunder.
(j) The financial statements and the notes thereto which
are included in the Registration Statement and which are a part of the
Prospectus present fairly the financial condition and retained earnings of the
Association as of the dates indicated and the results of operations and cash
flows for the periods specified. The financial statements comply in all
material respects with the applicable accounting requirements of Title 12 of
the Code of Federal Regulations, Regulation S-X of the Commission and generally
accepted accounting principles ("GAAP") applied on a consistent basis during
the periods presented except as otherwise noted therein, present fairly in all
material respects the information required to be stated therein, and are
consistent with the most recent financial statements and other reports filed by
the Association with the OTS and the FDIC except that accounting principles
employed in such filings conform to requirements of such authorities and not
necessarily to GAAP. The other financial, statistical and pro forma
information and related notes included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and unaudited
financial statements included in the Prospectus, and as to the pro forma
adjustments, the adjustments made therein have been properly applied on the
basis described therein.
(k) Since the respective dates as of which information is
given in the Registration Statement, including the Prospectus: (i) there has
not been any material adverse change in the financial condition or in the
earnings, capital, properties or business affairs of any of the Primary Parties
or of the Primary Parties considered as one enterprise, whether or not arising
in the ordinary course of business; (ii) there has not been any change in total
assets of the Association in an amount greater than $50.0 million, any material
increase in the aggregate amount of loans past due ninety (90) days or more, or
any real estate acquired by foreclosure or loans characterized as "in substance
foreclosure"; nor has the Association issued any securities or incurred any
liability or obligation for borrowings other than in the ordinary course of
business; (iii) there have not been any material transactions entered into by
any of the Primary Parties, other than those in the ordinary course of
business; and (iv) the capitalization, liabilities, assets, properties and
business of the Primary Parties conform in all material respects to the
descriptions thereof contained in the Prospectus and, none of the Primary
Parties has any material liabilities of any kind, contingent or otherwise,
except as disclosed in the Registration Statement or the Prospectus.
(l) The Holding Company is a corporation organized and in
good standing under the federal laws of the United States,
9
10
with corporate power and authority to own its properties and to conduct its
business as described in the Prospectus, and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business requires such qualification unless the failure to qualify in one
or more of such jurisdictions would not have a material adverse effect on the
financial condition, earnings, capital, properties or business affairs of the
Primary Parties. The Holding Company has obtained all licenses, permits and
other governmental authorizations currently required for the conduct of its
business, except those that individually or in the aggregate would not
materially adversely affect the financial condition, earnings, capital, assets
or properties of the Primary Parties taken as a whole; and all such licenses,
permits and governmental authorizations are in full force and effect, and the
Holding Company is complying in all material respects therewith.
(m) The MHC is duly organized and is validly existing as a
federally chartered mutual holding company under the laws of the United States,
duly authorized to conduct its business and own its property as described in
the Registration Statement and the Prospectus; the MHC has obtained all
licenses, permits and other governmental authorizations required for the
conduct of its business except those that individually or in the aggregate
would not materially adversely affect the financial condition, earnings,
capital, assets or properties of the Primary Parties taken as a whole; all such
licenses, permits and governmental authorizations are in full force and effect
and the MHC is complying therewith in all material respects; the MHC is duly
qualified as a foreign corporation to transact business in each jurisdiction in
which the failure to be so qualified in one or more of such jurisdictions would
have a material adverse effect on the financial condition, earnings, capital,
assets properties or business of the Primary Parties.
(n) The MHC does not own any equity securities or any equity
interest in any business enterprise except as described in the Prospectus.
(o) The MHC is not authorized to issue any shares of
capital stock.
(p) The Association is duly organized and validly
existing federally chartered association in mutual form, duly authorized to
conduct its business as described in the Prospectus; the activities of the
Association are permitted by the rules, regulations and practices of the OTS;
the Association has obtained all licenses, permits and other governmental
authorizations currently required for the conduct of its business except those
that individually or in the aggregate would not materially adversely affect the
financial condition of the Primary Parties taken as a whole; all such licenses,
permits and other governmental authorizations are in full force and effect and
the Association is in good standing under the laws of the
10
11
United States and is duly qualified as a foreign corporation to transact
business in each jurisdiction in which failure to so qualify would have a
material adverse effect upon the financial condition, earnings, capital,
properties or business affairs of the Association; all of the issued and
outstanding capital stock of the Association after the Reorganization will be
duly and validly issued and fully paid and nonassessable; and the Holding
Company will directly own all of such capital stock free and clear of any
mortgage, pledge, lien, encumbrance, claim or restriction. The Association
does not own equity securities or any equity interest in any other business
enterprise except as otherwise described in the Prospectus.
(q) The Association is a member of the Federal Home Loan
Bank of New York ("FHLB of New York"); the deposit accounts of the Association
are insured by the FDIC up to applicable limits. Upon consummation of the
Reorganization, the rights of the members of the Association in its mutual form
shall be transferred to MHC in accordance with the Plan and the requirements of
the MHC Regulations.
(r) The Association is not authorized to issue any shares
of capital stock.
(s) Upon consummation of the Reorganization, the
authorized, issued and outstanding equity capital of the Holding Company will
be within the range set forth in the Prospectus under the caption
"Capitalization," and, except for the shares of Common Stock held by MHC, no
shares of Common Stock have been or will be issued and outstanding prior to the
Closing Date; the shares of Common Stock issued and to be issued to the MHC,
and the shares of Common Stock to be subscribed for in the Offering have been
duly and validly authorized for issuance, and when issued and delivered by the
Holding Company pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and the Prospectus, will be duly and
validly issued and fully paid and nonassessable; the issuance of the Shares is
not subject to preemptive rights, except for the Subscription Rights granted
pursuant to the Plan; and the terms and provisions of the shares of Common
Stock will conform in all material respects to the description thereof
contained in the Prospectus. Upon issuance of the Shares, good title to the
Shares will be transferred from the Holding Company to the purchasers of Shares
against payment therefor in the Offering as set forth in the Plan and the
Prospectus.
(t) None of the Primary Parties are in violation of their
respective articles of incorporation or charter or their respective bylaws, or
in material default in the performance or observance of any obligation,
agreement, covenant, or condition contained in any contract, lease, loan
agreement, indenture or other instrument to which they are a party or by which
they, or any of their respective property, may be bound which would result in a
material adverse change in the condition (financial or
11
12
otherwise), earnings, capital, properties or business affairs of the Primary
Parties considered as one enterprise or which would materially affect their
properties or assets. The consummation of the transactions herein contemplated
will not (i) conflict with or constitute a breach of, or default under, the
articles of incorporation or bylaws of the Holding Company, or the charter or
bylaws of MHC or the Association, or materially conflict with or constitute a
material breach of, or default under, any material contract, lease or other
instrument to which any of the Primary Parties has a beneficial interest, or
any applicable law, rule, regulation or order that is material to the financial
condition of the Primary Parties on a consolidated basis; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or regulation
applicable to the Primary Parties except for such violations which would not
have a material adverse effect on the financial condition and results of
operations of the Primary Parties on a consolidated basis; or (iii) with the
exception of the liquidation account established in the Reorganization, result
in the creation of any material lien, charge or encumbrance upon any property
of the Primary Parties.
(u) No material default exists, and no event has occurred
which with notice or lapse of time, or both, would constitute a material
default on the part of any of the Primary Parties, in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, note, bank loan or credit agreement or any other material instrument
or agreement to which any of the Primary Parties is a party or by which any of
them or any of their property is bound or affected in any respect which, in any
such case, is material to the Primary Parties considered as one enterprise, and
such agreements are in full force and effect; and no other party to any such
agreements has instituted or, to the best knowledge of the Primary Parties,
threatened any action or proceeding wherein any of the Primary Parties is
alleged to be in default thereunder under circumstances where such action or
proceeding, if determined adversely to any of the Primary Parties, would have a
material adverse effect upon the Primary Parties considered as one enterprise.
(v) The Primary Parties have good and marketable title to
all assets which are material to the businesses of the Primary Parties and to
those assets described in the Prospectus as owned by them free and clear of all
material liens, charges, encumbrances, restrictions or other claims, except
such as are described in the Prospectus or which do not have a material adverse
effect on the businesses of the Primary Parties taken as a whole; and all of
the leases and subleases which are material to the businesses of the Primary
Parties, as described in the Registration Statement or Prospectus, are in full
force and effect.
(w) Except as may be described in the Prospectus, the
Primary Parties are not in material violation of any directive
12
13
from the OTS, the FDIC, the Commission or any other agency to make any material
change in the method of conducting their respective businesses; the Primary
Parties have conducted and are conducting their respective businesses so as to
comply in all respects with all applicable statutes and regulations (including,
without limitation, regulations, decisions, directives and orders of the OTS,
the Commission and the FDIC), except where the failure to so comply would not
reasonably be expected to result in any material adverse change in the
financial condition, results of operations, capital, properties or business
affairs of the Primary Parties considered as one enterprise and, except as set
forth in the Prospectus, there is no charge, investigation, action, suit or
proceeding before or by any court, regulatory authority or governmental agency
or body pending or, to the best knowledge any of the Primary Parties,
threatened, which would reasonably be expected to materially and adversely
affect the Reorganization, the performance of this Agreement, or the
consummation of the transactions contemplated in the Plan as described in the
Registration Statement, or which would reasonably be expected to result in any
material adverse change in the financial condition, results of operations,
capital, properties or business affairs of the Primary Parties considered as
one enterprise.
(x) The Primary Parties have received an opinion of their
special counsel, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("▇▇▇▇ ▇▇▇▇▇▇"), with
respect to the federal income tax consequences of the Reorganization, as
described in the Registration Statement and the Prospectus, and an opinion from
O'Reilly, Marsh, ▇▇▇▇▇▇▇ & Corteselli, P.C. ("OMK&C") with respect to the tax
consequences of the proposed transaction under the laws of the State of New
York; and the facts and representations upon which such opinions are based are
truthful, accurate and complete, and none of the Primary Parties will take any
action inconsistent therewith.
(y) The Association has timely filed all required federal
and state tax returns, has paid all taxes that have become due and payable in
respect of such returns, except where permitted to be extended, has made
adequate reserves for similar future tax liabilities, and, except as disclosed
in the Prospectus, no deficiency has been asserted with respect thereto by any
taxing authority.
(z) No approval, authorization, consent or other order of
any regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the
issuance of the Shares, except for the approval of the OTS and the Commission
(which have been received) and any necessary qualification, notification, or
registration or exemption under the securities or blue sky laws of the various
states in which the Shares are to be offered.
13
14
(aa) None of the Primary Parties has: (i) issued any
securities within the last 18 months (except for (a) notes to evidence bank
loans or other liabilities in the ordinary course of business or as described
in the Prospectus, and (b) shares of Common Stock issued to the MHC with
respect to the initial capitalization of the Holding Company); (ii) had any
dealings with respect to sales of securities within the 12 months prior to the
date hereof with any member of the NASD, or any person related to or associated
with such member, other than discussions and meetings relating to the Offering
and purchases and sales of U.S. government and agency and other securities in
the ordinary course of business; (iii) entered into a financial or management
consulting agreement except for the Letter Agreement and as contemplated
hereunder; or (iv) engaged any intermediary between the Agent and the Primary
Parties in connection with the Offering or the offering of shares of the common
stock of the Association, and no person is being compensated in any manner for
such services.
(ab) Neither the Primary Parties nor, to the best knowledge
of the Primary Parties, any employees of the Primary Parties have made any
payment of funds of the Primary Parties as a loan to any person for the
purchase of Conversion Shares, except for the Holding Company's loan to the
ESOP the proceeds of which will be used to purchase Conversion Shares, or has
made any other payment of funds prohibited by law, and no funds have been set
aside to be used for any payment prohibited by law.
(ac) The Association complies in all material respects with
the applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, and the
regulations and rules thereunder.
(ad) The Primary Parties have not relied upon Agent or its
counsel for any legal, tax or accounting advice in connection with the
Reorganization.
(ae) The records of Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are accurate and complete in all
material respects.
(af) The Primary Parties comply with all laws, rules and
regulations relating to environmental protection, and none of them has been
notified or is otherwise aware that any of them is potentially liable, or is
considered potentially liable, under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other Federal, state
or local environmental laws and regulations; no action, suit, regulatory
investigation or other proceeding is pending, threatened against the Primary
Parties relating to environmental protection, nor do the Primary parties have
any reason to believe any such proceedings may be brought against any of them;
and no disposal, release or discharge of hazardous or toxic substances,
14
15
pollutants or contaminants, including petroleum and gas products, as any of
such terms may be defined under federal, state or local law, has occurred on,
in, at or about any facilities or properties owned or leased by any of the
Primary Parties or, to the best knowledge of the Association, in which the
Association has a security interest.
(ag) All of the loans represented as assets on the most
recent financial statements or selected financial information of the
Association included in the Prospectus meet or are exempt from all requirements
of federal, state and local law pertaining to lending, including, without
limitation, truth in lending (including the requirements of Regulations Z and
12 C.F.R. Part 226), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws applicable to such
loans, except for violations which, if asserted, would not result in a material
adverse effect on the financial condition, results of operations or business of
the Primary Parties taken as a whole.
(ah) None of the Primary Parties are required to be
registered as an investment company under the Investment Company Act of 1940.
Any certificates signed by an officer of any of the Primary Parties
and delivered to the Agent or its their counsel that refer to this Agreement
shall be deemed to be a representation and warranty by the Primary Parties to
the Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
SECTION 7. COVENANTS OF THE PRIMARY PARTIES. The Primary Parties
hereby jointly and severally covenant with the Agent as follows:
(a) The Holding Company will not, at any time after the
date the Registration Statement is declared effective, file any amendment or
supplement to the Registration Statement without providing the Agent and its
counsel an opportunity to review such amendment or file any amendment or
supplement to which amendment the Agent or its counsel shall reasonably object.
(b) The Primary Parties will not, at any time after the
date any OTS Application is approved, file any amendment or supplement to such
OTS Application without providing the Agent and its counsel an opportunity to
review such amendment or supplement or file any amendment or supplement to
which amendment or supplement the Agent or its counsel shall reasonably object.
(c) The Primary Parties will use their best efforts to
cause the OTS to approve the Holding Company's acquisition of the Association,
and will use their best efforts to cause any post-effective amendment to the
Registration Statement to be declared effective by the Commission and any
post-effective amendment to
15
16
the OTS Applications to be approved by the OTS, and will immediately upon
receipt of any information concerning the events listed below notify the Agent
(i) when the Registration Statement, as amended, has become effective; (ii)
when the MHC Notice and Application, as amended, has been approved by the OTS;
(iii) when the Holding Company Application, as amended, has been approved by
the OTS; (iv) when the Merger Application has been approved by the OTS; (v) of
the receipt of any comments from the Commission, the OTS, or any other
governmental entity with respect to the Reorganization or the transactions
contemplated by this Agreement; (vi) of any request by the Commission, the OTS,
any other governmental entity for any amendment or supplement to the
Registration Statement or the OTS Applications or for additional information;
(vii) of the issuance by the Commission, the OTS, or any other governmental
agency of any order or other action suspending the Offerings or the use of the
Registration Statement or the Prospectus or any other filing of the Primary
Parties under the Conversion Regulations or other applicable law, or the threat
of any such action; (viii) of the issuance by the Commission, the OTS, the FDIC
or any state authority of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of initiation or threat
of any proceedings for that purpose; or (ix) of the occurrence of any event
mentioned in paragraph (f) below. The Primary Parties will make every
reasonable effort to prevent the issuance by the Commission, the OTS, the FDIC
or any state authority of any order referred to in (vii) and (viii) above and,
if any such order shall at any time be issued, to obtain the lifting thereof at
the earliest possible time.
(d) The Primary Parties will deliver to the Agent and to
its counsel conformed copies of each of the following documents, with all
exhibits: each of the OTS Applications as originally filed and of each
amendment or supplement thereto, and the Registration Statement, as originally
filed and each amendment thereto. Further, the Primary Parties will deliver
such additional copies of the foregoing documents to counsel to the Agent as
may be required for any NASD filings. In addition, the Primary Parties will
also deliver to the Agent such number of copies of the Prospectus, as amended
or supplemented, as the Agent may reasonably request.
(e) The Primary Parties will comply in all material
respects with any and all terms, conditions, requirements and provisions with
respect to the Reorganization and the transactions contemplated thereby imposed
by the Commission, by applicable state law and regulations, and by the 1933
Act, the Securities Exchange Act of 1934 (the "1934 Act") and the rules and
regulations of the Commission promulgated under such statutes, to be complied
with prior to or subsequent to the Closing Date; and when the Prospectus is
required to be delivered, the Primary Parties will comply in all material
respects, at their own expense, with all material requirements imposed upon
them by the OTS, the Conversion Regulations (except
16
17
as modified or waived in writing by the OTS), the Commission, by applicable
state law and regulations and by the 1933 Act, the 1934 Act and the rules and
regulations of the Commission promulgated under such statutes, in each case as
from time to time in force, so far as necessary to permit the continuance of
sales or dealing in shares of Common Stock during such period in accordance
with the provisions hereof and the Prospectus.
(f) The Primary Parties will inform the Agent of any
event or circumstances of which it is aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended,
would include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading.
If it is necessary, in the reasonable opinion of counsel for the Primary
Parties, to amend or supplement the Registration Statement or the Prospectus in
order to correct such untrue statement of a material fact or to make the
statements therein not misleading in light of the circumstances existing at the
time of their use, the Primary Parties will, at their expense, forthwith
prepare, file with the Commission and the OTS, and furnish to the Agent, a
reasonable number of copies of an amendment or amendments of, or a supplement
or supplements to, the Registration Statement and the Prospectus (in form and
substance reasonably satisfactory to counsel for the Agent after a reasonable
time for review) which will amend or supplement the Registration Statement
and/or the Prospectus so that as amended or supplemented it will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time, not misleading. For the purpose of this subsection, each of the
Primary Parties will furnish such information with respect to itself as the
Agent may from time to time reasonably request.
(g) Pursuant to the terms of the Plan, the Holding
Company will endeavor in good faith, in cooperation with the Agent, to register
or to qualify the Shares for offering and sale or to exempt such Shares from
registration and to exempt the Holding Company and its officers, directors and
employees from registration as broker-dealers, under the applicable securities
laws of the jurisdictions in which the Offering will be conducted; provided,
however, that the Holding Company shall not be obligated to file any general
consent to service of process or to qualify to do business in any jurisdiction
in which it is not so qualified. In each jurisdiction where any of the Shares
shall have been registered or qualified as above provided, the Holding Company
will make and file such statements and reports in each year as are or may be
required by the laws of such jurisdictions.
(h) The Holding Company will not sell or issue, contract
to sell or otherwise dispose of, for a period of 90 days after the date hereof,
without the Agent's prior written consent, which consent shall not be
unreasonably withheld, any shares of
17
18
Common Stock other than in connection with any plan or arrangement described in
the Prospectus.
(i) For the period of three years from the date of this
Agreement, the Holding Company will furnish to the Agent upon request (i) a
copy of each report of the Holding Company furnished to or filed with the
Commission under the 1934 Act or any national securities exchange or system on
which any class of securities of the Holding Company is listed or quoted, (ii)
a copy of each report of the Holding Company mailed to holders of Common Stock
or non-confidential report filed with the Commission or the OTS or any other
supervisory or regulatory authority or any national securities exchange or
system on which any class of the securities of the Holding Company is listed or
quoted, and (iii) from time to time, such other publicly available information
concerning the Primary Parties as the Agent may reasonably request.
(j) The Primary Parties will use the net proceeds from
the sale of the Common Stock in the manner set forth in the Prospectus under
the caption "Use of Proceeds."
(k) The Holding Company and the Association will
distribute the Prospectus or other offering materials in connection with the
offering and sale of the Common Stock only in accordance with the Conversion
Regulations, the 1933 Act and the 1934 Act and the rules and regulations
promulgated under such statutes, and the laws of any state in which the shares
are qualified for sale.
(l) The Holding Company shall register its Common Stock
under Section 12(g) of the 1934 Act, concurrent with the effective date of the
Registration Statement. The Holding Company shall maintain the effectiveness
of such registration for not less than three years or such shorter period as
permitted by the OTS.
(m) For so long as the Common Stock is registered under
the 1934 Act, the Holding Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year such reports and other
information as are required to be furnished to its stockholders under the 1934
Act (including consolidated financial statements of the Holding Company and its
subsidiaries, certified by independent public accountants).
(n) The Holding Company will comply with the provisions
of Rule 158 of the ▇▇▇▇ ▇▇▇.
(o) The Holding Company will file with the Commission,
within the required time period, such reports on Form SR as may be required
pursuant to Rule 463 under the 1933 Act.
(p) The Primary Parties will maintain appropriate
arrangements for depositing all funds received from persons
18
19
mailing subscriptions for or orders to purchase Conversion Shares on an
interest bearing basis at the rate described in the Prospectus until the
Closing Date and satisfaction of all conditions precedent to the release of the
Holding Company's obligation to refund payments received from persons
subscribing for or ordering Conversion Shares in the Conversion Offerings, in
accordance with the Plan as described in the Prospectus, or until refunds of
such funds have been made to the persons entitled thereto or withdrawal
authorizations canceled in accordance with the Plan and as described in the
Prospectus. The Primary Parties will maintain such records of all funds
received to permit the funds of each subscriber to be separately insured by the
FDIC (to the maximum extent allowable) and to enable the Primary Parties to
make the appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in the
Prospectus.
(q) The MHC and the Holding Company will each promptly
register as a savings and loan holding company under the HOLA.
(r) The Primary Parties will take such actions and
furnish such information as are reasonably requested by the Agent in order for
the Agent to ensure compliance with the "Interpretation of the Board of
Governors of the NASD on Free Riding and Withholding."
(s) The Primary Parties will conduct their businesses in
compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the OTS and the FDIC.
(t) The Primary Parties will not amend the Plan without
notifying the Agent prior thereto.
(u) The Holding Company shall provide the Agent with any
information necessary to carry out the allocation of the Conversion Shares in
the event of an oversubscription, and such information shall be accurate and
reliable in all material respects.
(v) The Holding Company will not deliver the Shares until
the Primary Parties have satisfied or caused to be satisfied each condition set
forth in Section 9 hereof, unless such condition is waived in writing by the
Agent.
(w) Upon completion of the sale by the Holding Company of
the Shares contemplated by the Plan and the Prospectus, (i) the MHC shall have
been formed pursuant to the Plan and shall own at all times more than 50% of
the issued and outstanding shares of Common Stock, (ii) all of the issued and
outstanding shares of capital stock of the Association shall be owned by the
Holding Company, (iii) the Holding Company shall have no direct subsidiaries
other than the Association, and (iv) the
19
20
Reorganization shall have been effected in accordance with all applicable
statutes, regulations, decisions and orders; and all terms, conditions,
requirements and provisions with respect to the Reorganization (except those
that are conditions subsequent) imposed by the Commission, the OTS or any other
governmental agency, if any, shall have been complied with by the Primary
Parties in all material respects or appropriate waivers shall have been
obtained and all notice and waiting periods shall have been satisfied, waived
or elapsed.
(x) Prior to the Closing Date, the Plan shall have been
approved by the eligible voting members of the Association in accordance with
the Conversion Regulations and the provisions of the Association's charter and
bylaws.
(y) As of the Closing Date, the Primary Parties shall have
completed all conditions precedent to the Reorganization in accordance with the
Plan and shall have complied in all material respects with applicable laws,
regulations (except as modified or waived in writing by the OTS), decisions and
orders, including all terms, conditions, requirements and provisions precedent
to the Reorganization imposed upon it by the OTS as set forth in correspondence
received from the OTS.
(z) On or before the Closing Date, the Primary Parties will
have completed all conditions precedent to the Reorganization specified in the
Plan and the offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion Regulations
(except as modified or waived in writing by the OTS) and with all other
applicable laws, regulations, decisions and orders, including all terms,
conditions, requirements and provisions precedent to the Reorganization imposed
upon any of the Primary Parties by the OTS, the Commission or any other
regulatory authority and in the manner described in the Prospectus.
SECTION 8. PAYMENT OF EXPENSES. Whether or not the Reorganization is
completed or the sale and exchange of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the
preparation and filing of the OTS Applications; (b) the preparation, printing,
filing, delivery and shipment of the Registration Statement, including the
Prospectus, and all amendments and supplements thereto; (c) all filing fees and
expenses in connection with the qualification or registration of the Shares for
offer and sale by the Holding Company or the Association under the securities
or "blue sky" laws, including without limitation filing fees, reasonable legal
fees and disbursements of counsel in connection therewith, and in connection
with the preparation of a blue sky law survey; (d) the filing fees of the NASD;
and (e) the reasonable expenses of the Agent, including without limitation,
accounting, communications, legal and travel expenses. Any such expense
incurred by the Agent shall be reimbursed by the Primary
20
21
Parties. Notwithstanding the foregoing, the Primary Parties shall not be
required to reimburse Agent for more than $30,000 in legal fees and $10,000 in
non-legal out-of-pocket expenses, except in the event of any material delay in
the Offering that would require an update of the financial information in
tabular form contained in the Registration Statement to reflect a period later
than that set forth in the original Registration Statement filing. Not later
than three days prior to the Closing Date, the Agent will provide the
Association with a detailed accounting of all reimbursable expenses to be paid
at the Closing.
SECTION 9. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of
the Agent hereunder and the occurrence of the Closing and the Reorganization
are subject to the condition that all representations and warranties and other
statements of the Primary Parties herein contained are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and
correct, the condition that the Primary Parties shall have performed all of
their obligations hereunder to be performed on or before such dates and to the
following further conditions:
(a) The Registration Statement shall have been declared
effective by the Commission and the MHC Notice and Application approved by the
OTS prior to the commencement of the Offering, the Holding Company Application
shall have been approved, and no stop order or other action suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or, to any of the Primary Parties'
best knowledge, threatened by the Commission or any state authority and no
order or other action suspending the authorization for use of the Prospectus or
the consummation of the Reorganization shall have been issued or proceedings
therefor initiated or, to any of the Primary Parties' best knowledge,
threatened by the OTS, the Commission, or any other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the
Closing Date, of ▇▇▇▇ ▇▇▇▇▇▇, in form and substance satisfactory to counsel for
the Agent to the effect that:
(i) The Holding Company is a corporation
duly organized and validly existing and in good standing under the federal laws
of the United States of America, with corporate power and authority to own its
properties and to conduct its business as described in the Prospectus, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business requires such qualification
and in which the failure to qualify would have a material adverse effect on the
financial condition, earnings, capital, properties or business affairs of the
Primary Parties.
21
22
(ii) The Association is a duly organized and
validly existing federally chartered mutual savings association with full power
and authority to own its properties and to conduct its business as described in
the Prospectus and to enter into this Agreement and perform its obligations
hereunder; the activities of the Association as described in the Prospectus are
permitted by the rules, regulations and practices of the OTS; the issuance and
sale of the capital stock of the Association to the Holding Company in the
Reorganization has been duly and validly authorized by all necessary corporate
action on the part of the Holding Company and the Association and, upon payment
therefor in accordance with the terms of the Plan, will be validly issued,
fully paid and nonassessable; and will be owned of record and beneficially by
the Holding Company, free and clear of any mortgage, pledge, lien, encumbrance,
claim or restriction.
(iii) The Association is a member of the
FHLB of New York and the Association is an insured depository institution under
the provisions of the Federal Deposit Insurance Act, as amended, and to such
counsel's knowledge no proceedings for the termination or revocation of such
insurance are pending or threatened.
(iv) The MHC has been duly organized and is
validly existing as a federally chartered mutual holding company, duly
authorized to conduct its business and own its properties as described in the
Registration Statement and Prospectus.
(v) Upon consummation of the Reorganization,
(a) the authorized, issued and outstanding capital stock of the Holding Company
will be within the range set forth in the Prospectus under the caption
"Capitalization," and no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Date (except for the shares issued to the MHC
upon incorporation of the Holding Company); (b) the shares of Common Stock of
the Holding Company issued to the MHC will have been duly and validly
authorized for issuance and fully paid and nonassessable; (c) the shares of
Common Stock of the Holding Company to be subscribed for in the Offering will
have been duly and validly authorized for issuance, and when issued and
delivered by the Holding Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan, will be fully paid and
nonassessable; and (d) the issuance of the shares of Common Stock is not
subject to preemptive rights under the charter, articles of incorporation or
bylaws of any of the Primary Parties, or arising or outstanding by operation of
law or, to the best knowledge of such counsel, under any contract, indenture,
agreement, instrument or other document, except for the subscription rights
under the Plan.
(vi) The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Primary Parties; and this Agreement
22
23
constitutes a valid, legal and binding obligation of each of the Primary
Parties, enforceable in accordance with its terms, except to the extent that
the provisions of Sections 10 and 11 hereof may be unenforceable as against
public policy, and except to the extent that such enforceability may be limited
by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of savings institutions
insured by the FDIC (including the laws relating to the rights of the
contracting parties to equitable remedies).
(vii) The Plan has been duly adopted by the
board of directors of the Association and by the members of the Association, in
the manner required by the MHC Regulations and the Association's respective
charter and bylaws.
(viii) The OTS Applications have been
approved by the OTS and the Prospectus and the Proxy Statement have been
authorized for use by the OTS, and subject to the satisfaction of any
conditions set forth in such OTS approvals, no further approval, registration,
authorization, consent or other order of any federal regulatory agency, public
board or body is required in connection with the execution and delivery of this
Agreement, the offer, sale and issuance of the Shares and the consummation of
the Reorganization.
(ix) The purchase by the Holding Company of
all of the issued and outstanding capital stock of the Association has been
authorized by the OTS and no action has been taken, or, to such counsel's
knowledge, is pending or threatened, to revoke any such authorization or
approval.
(x) The Registration Statement has become
effective under the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of such counsel's
knowledge, no proceedings for that purpose have been instituted or threatened.
(xi) The material tax consequences of the
Reorganization are set forth in the Prospectus under the caption "The
Reorganization and Offering -- Tax Effects of the Reorganization." The
information in the Prospectus under the caption "The Reorganization and
Offering -- Tax Effects of the Reorganization" has been reviewed by such
counsel and fairly describes such opinions rendered by such counsel and OMK&C
to the Primary Parties with respect to such matters.
(xii) The terms and provisions of the shares
of Common Stock conform to the description thereof contained in the
Registration Statement and the Prospectus and such description describes in all
material respects the rights of the holders thereof; the information in the
Prospectus under the captions "The Reorganization and Offering -- Absence of
Cumulative Voting" and "-- Authorization of Preferred Stock,"
23
24
"Restrictions on the Acquisition of the Company" and "Description of Capital
Stock," to the extent that they constitute matters of law or legal conclusions,
has been prepared by such counsel and is accurate in all material respects; and
the forms of certificates proposed to be used to evidence the shares of Common
Stock are in due and proper form.
(xiii) At the time the MHC Notice and
Application was approved, the MHC Notice and Application (as amended or
supplemented) including the Prospectus contained therein, complied as to form
in all material respects with the requirements of the MHC Regulations and all
applicable laws, rules and regulations and decisions and orders of the OTS,
except as modified or waived in writing by the OTS (other than the financial
statements, notes to financial statements, financial tables and other financial
and statistical data included therein and the appraisal valuation as to which
counsel need express no opinion). To such counsel's knowledge, no person has
sought to obtain regulatory or judicial review of the final action of the OTS
approving the OTS Applications.
(xiv) At the time that the Registration
Statement became effective the Registration Statement, including the Prospectus
contained therein (as amended or supplemented) (other than the financial
statements, notes to financial statements, financial tables or other financial
and statistical data included therein and the appraisal valuation as to which
counsel need express no opinion), complied as to form in all material respects
with the requirements of the 1933 Act and the rules and regulations promulgated
thereunder.
(xv) To the best of such counsel's
knowledge, there are no legal or governmental proceedings pending, or
threatened (i) asserting the invalidity of this Agreement or (ii) seeking to
prevent the Reorganization or the offer, sale or issuance of the Shares.
(xvi) The information in the Prospectus
under the captions "Regulation," "Taxation," and "The Reorganization and
Offering," to the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been prepared by
such counsel and is accurate in all material respects (except as to the
financial statements and other financial data included therein as to which such
counsel need express no opinion).
(xvii) None of the Primary Parties are
required to be registered as an investment company under the Investment Company
Act of 1940.
(xviii) The Association has duly adopted a
federal stock charter and bylaws effective upon consummation of the
Reorganization, and none of the Primary Parties is in violation of its articles
of incorporation or its charter, as the
24
25
case may be, or its bylaws or, to the best of such counsel's knowledge, any
material obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
filed as an exhibit to, or incorporated by reference in, the Registration
Statement, which violation would have a material adverse effect on the
financial condition of the Primary Parties considered as one enterprise, or on
the earnings, capital, properties or business affairs of the Primary Parties
considered as one enterprise; the execution and delivery of this Agreement by
the Primary Parties, the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein, will not materially
conflict with, constitute a material breach of, or default under, or result in
the creation or imposition of any material lien, charge or encumbrance upon any
property or assets of any of the Primary Parties which are material to their
business considered as one enterprise, pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which any of the
Primary Parties is a party or by which any of them may be bound, or to which
any of the property or assets of the Primary Parties are subject. In addition,
the execution and delivery of and performance under this Agreement by the
Primary Parties, the incurrence of the obligations set forth herein and the
consummation of the transactions contemplated herein will not result in any
material violation of the provisions of the articles of incorporation or
charter, as the case may be, or the bylaws of any of the Primary Parties or any
material violation of any applicable law, act, regulation, or to such counsel's
knowledge, order or court order, writ, injunction or decree.
The opinion may be limited to matters governed by the laws of the
United States and the State of New York. In rendering such opinion, such
counsel may rely (A) as to matters involving the application of laws of any
jurisdiction other than the United States, to the extent such counsel deems
proper and specified in such opinion, upon the opinion of other counsel of good
standing, as long as such other opinion indicates that the Agent may rely on
the opinion, and (B) as to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of the Primary Parties and
public officials; provided copies of any such opinion(s) or certificates of
public officials are delivered to Agent together with the opinion to be
rendered hereunder by special counsel to the Primary Parties. The opinion of
such counsel for the Primary Parties shall state that it has no reason to
believe that the Agent is not justified in relying thereon.
(2) The letter of ▇▇▇▇ ▇▇▇▇▇▇ in form and
substance to the effect that during the preparation of the Registration
Statement and the Prospectus, ▇▇▇▇ ▇▇▇▇▇▇ participated in conferences with
certain officers of and other representatives of the Primary Parties, counsel
to the Agent, representatives of the independent public accountants for the
Primary Parties and representatives of the Agent at which the
25
26
contents of the Registration Statement and the Prospectus and related matters
were discussed and has considered the matters required to be stated therein and
the statements contained therein and, although (without limiting the opinions
provided pursuant to Section 9(b)(1)) ▇▇▇▇ ▇▇▇▇▇▇ has not independently
verified the accuracy, completeness or fairness of the statements contained in
the Registration Statement and Prospectus, on the basis of the foregoing,
nothing has come to the attention of ▇▇▇▇ ▇▇▇▇▇▇ that caused ▇▇▇▇ ▇▇▇▇▇▇ to
believe that the Registration Statement at the time it was declared effective
by the SEC and as of the date of such letter, contained or contains any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that counsel need express no comment or opinion with respect to the financial
statements, schedules and other financial and statistical data included, or
statistical or appraisal methodology employed, in the Registration Statement or
Prospectus).
(3) The favorable opinion, dated as of the
Closing Date, of ▇▇▇▇▇▇▇ & ▇▇▇, counsel for the Agent, with respect to such
matters as the Agent may reasonably require; such opinion may rely, as to
matters of fact, upon certificates of officers and directors of the Primary
Parties delivered pursuant hereto or as such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement,
the Agent shall receive a letter from ▇▇▇ ▇▇▇▇▇ & Co., dated the date hereof
and addressed to the Agent, (i) such letter confirming that ▇▇▇ ▇▇▇▇▇ & Co. is
a firm of independent public accountants within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants,
the 1933 Act and the regulations promulgated thereunder and 12 C.F.R. Section
571.2(c)(3), and no information concerning its relationship with or interests
in the Primary Parties is required by the OTS Applications or Item 10 of the
Registration Statement, and stating in effect that in ▇▇▇ ▇▇▇▇▇ & Co.'s opinion
the financial statements of the Association included in the Prospectus comply
as to form in all material respects with the applicable accounting requirements
of the 1933 Act, the 1934 act and the related published rules and regulations
of the Commission thereunder and the Conversion Regulations and generally
accepted accounting principles consistently applied; (ii) stating in effect
that, on the basis of certain agreed upon procedures (but not an audit
examination in accordance with generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim financial
statements of the Association prepared by the Association, a reading of the
minutes of the meetings of the Board of Directors of the Association and the
members of the Association, a review of interim financial information in
accordance with Statement on Auditing Standards No. 71, and consultations with
officers of the Association responsible for financial and accounting matters,
nothing came to
26
27
their attention which caused them to believe that: (A) such unaudited
financial statements, including recent developments, if any, are not in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Prospectus; or (B) during the period from the date of the latest
unaudited consolidated financial statements included in the Prospectus to a
specified date not more than three business days prior to the date hereof,
there was any increase in borrowings (defined as advances from the FHLB of New
York, securities sold under agreements to repurchase and any other form of debt
other than deposits) of any of the Primary Parties or in nonperforming loans of
the Association; or (C) there was any decrease in retained earnings of the
Association at the date of such letter as compared with amounts shown in the
latest unaudited statement of condition included in the Prospectus or there was
any decrease in net income or net interest income of the Association for the
number of full months commencing immediately after the period covered by the
latest unaudited income statement included in the Prospectus and ended on the
latest month end prior to the date of the Prospectus or in such letter as
compared to the corresponding period in the preceding year; and (iii) stating
that, in addition to the audit examination referred to in its opinion included
in the Prospectus and the performance of the procedures referred to in clause
(ii) of this subsection (c), they have compared with the general accounting
records of the Primary Parties, which are subject to the internal controls of
the accounting system of the Primary Parties and other data prepared by the
Primary Parties directly from such accounting records, to the extent specified
in such letter, such amounts and/or percentages set forth in the Prospectus as
the Agent may reasonably request, and they have found such amounts and
percentages to be in agreement therewith (subject to rounding).
(d) At the Closing Date, the Agent shall receive a letter
from ▇▇▇ ▇▇▇▇▇ & Co. dated the Closing Date, addressed to the Agent, confirming
the statements made by its letter delivered by it pursuant to subsection (c) of
this Section 9, the "specified date" referred to in clause (ii)(B) thereof to
be a date specified in such letter, which shall not be more than three business
days prior to the Closing Date.
(e) At the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as counsel for the Agent may
require for the purpose of enabling them to advise the Agent with respect to
the issuance and sale of the Common Stock as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a
certificate of the Chief Executive Officer and Chief Financial Officer of each
of the Primary Parties, dated the Closing Date,
27
28
to the effect that (i) they have carefully examined the Prospectus and at the
time the Prospectus became authorized for final use, the Prospectus did not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) there has not
been, since the respective dates as of which information is given in the
Prospectus, any material adverse change in the financial condition or in the
earnings, capital, properties, business prospects or business affairs of the
Primary Parties, considered as one enterprise, whether or not arising in the
ordinary course of business; (iii) the representations and warranties contained
in Section 6 of this Agreement are true and correct with the same force and
effect as though made at and as of the Closing Date; (iv) the Primary Parties
have complied in all material respects with all material agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to the Closing Date including the conditions contained in this Section 9; (v)
no stop order has been issued or, to the best of their knowledge, is
threatened, by the Commission or any other governmental body; (vi) no order
suspending the Offering, the Reorganization, the acquisition of all of the
shares of the Association by the Holding Company, the acquisition by MHC of
shares of the Common Stock or the effectiveness of the Prospectus has been
issued and to the best of their knowledge, no proceedings for any such purpose
have been initiated or threatened by the OTS, the Commission, the FDIC, or any
other federal or state authority; (vii) to the best of their knowledge, no
person has sought to obtain regulatory or judicial review of the action of the
OTS in approving the Plan or to enjoin the Reorganization.
(g) At the Closing Date, the Agent shall receive a letter
from ▇▇▇▇▇▇▇ Financial Advisors, Inc., dated as of the Closing Date, (i)
confirming that said firm is independent of the Primary Parties and is
experienced and expert in the area of corporate appraisals within the meaning
of the Conversion Regulations, (ii) stating in effect that the Appraisal
complies in all material respects with the applicable requirements of the
Conversion Regulations, and (iii) further stating that its opinion of the
aggregate pro forma market value of the Primary Parties, as converted,
expressed in the Appraisal as most recently updated, remains in effect.
(h) None of the Primary Parties shall have sustained,
since the date of the latest audited financial statements included in the
Registration Statement and Prospectus, any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the Registration
Statement and the Prospectus, and since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall not have
28
29
been any material change, or any development involving a prospective material
change in, or affecting the general affairs of, management, financial position,
retained earnings, long-term debt, stockholders' equity or results of
operations of any of the Primary Parties, otherwise than as set forth or
contemplated in the Registration Statement and the Prospectus, the effect of
which, in any such case described above, is in the Agent's reasonable judgment
sufficiently material and adverse as to make it impracticable or inadvisable to
proceed with the Offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.
(i) Prior to and at the Closing Date: (i) in the
reasonable opinion of the Agent, there shall have been no material adverse
change in the financial condition or in the earnings, capital, properties or
business affairs of any of the Primary Parties independently, or of the Primary
Parties, considered as one enterprise, from that as of the latest dates as of
which such condition is set forth in the Prospectus, except as referred to
therein; (ii) there shall have been no material transaction entered into by the
Primary Parties, considered as one enterprise, from the latest date as of which
the financial condition of the Primary Parties is set forth in the Prospectus,
other than transactions referred to or contemplated therein; (iii) none of the
Primary Parties shall have received from the OTS or the FDIC any direction
(oral or written) to make any material change in the method of conducting their
business with which it has not complied in all material respects (which
direction, if any, shall have been disclosed to the Agent) and which would
reasonably be expected to have a material and adverse effect on the condition
(financial or otherwise) or on the earnings, capital, properties or business
affairs of the Primary Parties considered as one enterprise; (iv) none of the
Primary Parties shall have been in default (nor shall an event have occurred
which, with notice or lapse of time or both, would constitute a default) under
any provision of any agreement or instrument relating to any material
outstanding indebtedness; (v) no action, suit or proceeding, at law or in
equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of the Primary
Parties, threatened against any of the Primary Parties or affecting any of
their properties wherein an unfavorable decision, ruling or finding would
reasonably be expected to have a material and adverse effect on the financial
condition or on the earnings, capital, properties or business affairs of the
Primary Parties, considered as one enterprise; and (vi) the Shares have been
qualified or registered for offering and sale under the securities or blue sky
laws of the jurisdictions requested by the Agent.
(j) At or prior to the Closing Date, the Agent shall
receive (i) a copy of the letter from the OTS authorizing the use of the
Prospectus and approving the MHC Notice and Application, (ii) a copy of the
order from the Commission declaring the
29
30
Registration Statement effective, (iii) a copy of certificate of existence for
the Association from the OTS, (iv) a certificate of good standing from the
appropriate federal authority evidencing the good standing of the Holding
Company, (v) a copy of the letter from the OTS approving the Holding Company
Application, (vi) a certificate from the FDIC evidencing the Association's
insurance of accounts, (vii) a certificate of the FHLB of New York evidencing
the Association's membership therein, (viii) a certificate from the OTS
evidencing the existence of the MHC, (ix) a copy of the letters from the OTS
approving the Merger Application and (x) any other documents that Agent shall
reasonably request.
(k) The Primary Parties shall not have sustained, since
the date of the latest audited financial statements included in the
Registration Statement and Prospectus, any loss or interference with their
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Registration
Statement or otherwise provided to the Agent in writing and in any such case
described above, which is, in Agent's judgment, sufficiently material and
adverse as to make it impracticable or inadvisable to proceed with the Offering
or the delivery of the Common Stock on the terms and in the manner contemplated
in the Prospectus.
(l) Subsequent to the date hereof, there shall not have
occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange
or in the over-the-counter market, or quotations halted generally on the Nasdaq
Stock Market, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required by either of such
exchanges or the NASD or by order of the Commission or any other governmental
authority; (ii) a general moratorium on the operations of commercial banks or
other federally-insured financial institutions or general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; (iii)
the engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of any of (i) through (iv) herein, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the delivery of
the Shares on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
30
31
SECTION 10. INDEMNIFICATION.
(a) The Primary Parties jointly and severally agree to
indemnify and hold harmless the Agent, its officers, directors, agents,
servants and employees and each person, if any, who controls the Agent within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act,
against any and all loss, liability, claim, damage or expense whatsoever
(including but not limited to settlement expenses), joint or several, that the
Agent or any of such officers, directors, agents, servants, employees and
controlling Persons (collectively, the "Related Persons") may suffer or to
which the Agent or the Related Persons may become subject under all applicable
federal and state laws or otherwise, and to promptly reimburse the Agent and
any Related Persons upon written demand for any reasonable expenses (including
fees and disbursements of counsel) incurred by the Agent or any Related Persons
in connection with investigating, preparing or defending any actions,
proceedings or claims (whether commenced or threatened) to the extent such
losses, claims, damages, liabilities or actions (i) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the OTS Applications, or any blue sky application or other instrument
or document of the Primary Parties or based upon written information supplied
by any of the Primary Parties filed in any state or jurisdiction to register or
qualify any or all of the Shares under the securities laws thereof
(collectively, the "Blue Sky Applications"), or any application or other
document, advertisement, or communication ("Sales Information") prepared, made
or executed by or on behalf of any of the Primary Parties with its consent or
based upon written information furnished by or on behalf of any of the Primary
Parties, whether or not filed in any jurisdiction in order to qualify or
register the Shares under the securities laws thereof, (ii) arise out of or
based upon the omission or alleged omission to state in any of the foregoing
documents or information, a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (iii) arise from any theory of liability
whatsoever relating to or arising from or based upon the Registration Statement
(or any amendment or supplement thereto), preliminary or final Prospectus (or
any amendment or supplement thereto), the OTS Applications, any Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Reorganization; or (iv) result from any claims made with
respect to the accuracy, reliability and completeness of the records of
Eligible Account Holders, Supplemental Eligible Account Holders and Other
Members or for any denial or reduction of a subscription or order to purchase
Common Stock, whether as a result of a properly calculated allocation pursuant
to the Plan or otherwise, based upon such records; provided, however, that no
indemnification is required under this paragraph (a) to the extent such losses,
31
32
claims, damages, liabilities or actions arise out of or are based upon any
untrue material statements or alleged untrue material statements in, or
material omission or alleged material omission from, the Registration Statement
(or any amendment or supplement thereto) or the preliminary or final Prospectus
(or any amendment or supplement thereto), the OTS Applications, the Blue Sky
Applications or Sales Information or other documentation distributed in
connection with the Reorganization made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent with respect
to the Agent expressly for use in the Registration Statement (or any amendment
or supplement thereto) or Prospectus (or any amendment or supplement thereto)
under the captions "Market for the Common Stock" and "The Reorganization and
Offering -- Marketing Agent" and "--Selected Dealers" or statistical
information regarding the Holding Company prepared by the Agent for use in the
Sales Information, except for information derived from the Prospectus.
Provided further, that the Primary Parties will not be responsible for any
loss, liability, claim, damage or expense to the extent they result primarily
from actions taken or omitted to be taken by the Agent in bad faith or from the
Agent's gross negligence or willful misconduct, and the Agent agrees to repay
to the Primary Parties any amounts advanced to it by the Primary Parties in
connection with matters as to which it is found not to be entitled to
indemnification hereunder.
(b) The Agent agrees to indemnify and hold harmless the
Primary Parties, their directors and officers, agents, servants and employees
and each person, if any, who controls any of the Primary Parties within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against
any and all loss, liability, claim, damage or expense whatsoever (including but
not limited to settlement expenses), joint or several which they, or any of
them, may suffer or to which they, or any of them, may become subject under all
applicable federal and state laws or otherwise, and to promptly reimburse the
Primary Parties and any such persons upon written demand for any reasonable
expenses (including fees and disbursements of counsel) incurred by them in
connection with investigating, preparing or defending any actions, proceedings
or claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment of supplement thereto), the OTS
Applications or any Blue Sky Applications or Sales Information or are based
upon the omission or alleged omission to state in any of the foregoing
documents a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Agent's obligations under
this Section 10(b) shall exist only if and only to the extent that such untrue
statement or alleged untrue statement was made in, or such material fact or
alleged material fact was omitted from, the Registration Statement (or
32
33
any amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Primary Parties by the Agent expressly for use under the
captions "Market for the Common Stock" and "The Reorganization and Offering --
Marketing Agent" and "--Selected Dealers" or statistical information regarding
the Holding Company prepared by the Agent for use in the Sales information
(except for statistical information derived from the Prospectus).
(c) Each indemnified party shall give prompt written
notice to each indemnifying party of any action, proceeding, claim (whether
commenced or threatened), or suit instituted against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have on account of
this Section 10 or otherwise. An indemnifying party may participate at its own
expense in the defense of such action. In addition, if it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume defense
of such action with counsel chosen by it and approved by the indemnified
parties that are defendants in such action, unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them that are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action, proceeding or claim, other than reasonable costs
of investigation. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one separate firm of attorneys (and any special
counsel that said firm may retain) for all indemnified parties in connection
with any one action, proceeding or claim or separate but similar or related
actions, proceedings or claims in the same jurisdiction arising out of the same
general allegations or circumstances.
(d) The agreements contained in this Section 10 and in
Section 11 hereof and the representations and warranties of the Primary Parties
set forth in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Agent or its
officers, directors, controlling persons, agents or employees or by or on
behalf of any of the Primary Parties or any officers, directors, controlling
persons, agents or employees of any of the Primary Parties; (ii) delivery of
and payment hereunder for the Shares; or (iii) any termination of this
Agreement.
33
34
SECTION 11. CONTRIBUTION.
(a) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 10 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Primary Parties on the one hand, or the Agent
on the other hand, as the case may be, the Primary Parties on the one hand, or
the Agent on the other hand, as the case may be, shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses incurred in connection therewith and any amount paid
in settlement of any action, suit or proceeding of any claims asserted, but
after deducting any contribution received by the Primary Parties on the one
hand, or the Agent on the other hand, as the case may be, from persons other
than the other party thereto, who may also be liable for contribution) in such
proportion so that (i) the Agent is responsible for that portion represented by
the percentage that the fees paid to the Agent pursuant to Section 4 of this
Agreement (not including expenses), less any portion of such fees paid by Agent
to Assisting Brokers, bear to the gross proceeds received by the Primary
Parties from the sale of the Conversion Shares in the Conversion Offerings, and
(ii) the Primary Parties shall be responsible for the balance. If, however,
the allocation provided above is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 10 above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative fault of the Primary Parties on the one hand and the Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions, proceedings or claims in
respect thereof), but also the relative benefits received by the Primary
Parties on the one hand and the Agent on the other from the Offering, as well
as any other relevant equitable considerations. The relative benefits received
by the Primary Parties on the one hand and the Agent on the other hand shall be
deemed to be in the same proportion as the total gross proceeds from the
Conversion Offerings (before deducting expenses) received by the Primary
Parties bear, with respect to the Agent, to the total fees (not including
expenses) received by the Agent less the portion of such fees paid by the Agent
to Assisting Brokers. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Primary Parties on the one hand or the
Agent on the other and the parties relative intent, good faith, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Primary Parties and the Agent agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined by
pro-rata allocation or by any other method of allocation which does not take
account of the equitable
34
35
considerations referred to above in this Section 11. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or action, proceedings or claims in respect thereof) referred to
above in this Section 11 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action, proceeding or claim. It is expressly agreed that
the Agent shall not be liable for any loss, liability, claim, damage or expense
or be required to contribute any amount which in the aggregate exceeds the
amount paid (excluding reimbursable expenses) to the Agent under this Agreement
less the portion of such fees paid by the Agent to Assisting Brokers. It is
understood that the above-stated limitation on the Agent's liability is
essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this
Agreement. No person found guilty of any fraudulent misrepresentation (within
the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
The duties, obligations and liabilities of the Primary Parties and the Agent
under this Section 11 and under Section 10 shall be in addition to any duties,
obligations and liabilities which the Primary Parties and the Agent may
otherwise have. For purposes of this Section 11, each of the Agent's and the
Primary Parties' officers and directors and each person, if any, who controls
the Agent or any of the Primary Parties within the meaning of the 1933 Act and
the 1934 Act shall have the same rights to contribution as the Primary Parties
and the Agent. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 11, will notify such party from whom contribution may
be sought, but the omission to so notify such party shall not relive the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 11.
SECTION 12. REPRESENTATIONS, WARRANTIES AND INDEMNITIES TO SURVIVE
DELIVERY. All representations, warranties and indemnities and other statements
contained in this Agreement, or contained in certificates of officers of the
Primary Parties or the Agent submitted pursuant hereto, shall remain operative
and in full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of the Agent or its
controlling persons, or by or on behalf of the Primary Parties and shall
survive the issuance of the Shares, and any legal representative, successor or
assign of the Agent, any of the Primary Parties, and any indemnified person
shall be entitled to the benefit of the respective agreements, indemnities,
warranties and representations.
35
36
SECTION 13. TERMINATION. Agent may terminate this Agreement by
giving the notice indicated below in this Section at any time after this
Agreement becomes effective as follows:
(a) In the event the Holding Company fails to sell the
minimum number of the Conversion Shares within the period specified in
accordance with the provisions of the Plan or as required by the Conversion
Regulations and applicable law, this Agreement shall terminate upon refund by
the Primary Parties to each person who has subscribed for or ordered any of the
Conversion Shares the full amount which it may have received from such person,
together with interest in accordance with Section 3, and no party to this
Agreement shall have any obligation to the other hereunder, except as set forth
in Sections 3, 4, 8, 10 and 11 hereof.
(b) If any of the conditions specified in Section 9 shall
not have been fulfilled when and as required by this Agreement, or by the
Closing Date, or waived in writing by the Agent, this Agreement and all of the
Agent's obligations hereunder may be canceled by the Agent by notifying the
Association of such cancellation in writing at any time at or prior to the
Closing Date, and, any such cancellation shall be without liability of any
party to any other party except as otherwise provided in Sections 3, 4, 8, 10
and 11 hereof.
(c) If Agent elects to terminate this Agreement as
provided in this Section, the Association shall be notified by the Agent as
provided in Section 14 hereof.
(d) If this Agreement is terminated in accordance with the
provisions of Sections 3, 9, or 13, the Primary Parties shall pay the Agent the
fees earned pursuant to Section 4 and will reimburse the Agent for its
reasonable expenses pursuant to Section 8, including without limitation
accounting, communication, legal and travel expenses.
SECTION 14. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Agent shall
be directed to ▇▇▇▇, ▇▇▇▇ & Co., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ (with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire, ▇▇▇▇▇▇▇ &
▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Cherry Hill, New Jersey 07034); notices to
the Primary Parties shall be directed to Atlantic Liberty Savings, F.A., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
and Chief Executive Officer (with a copy to ▇▇▇▇ ▇▇▇▇, Esquire, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇.▇. 20015).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Agent and the Primary Parties, and their respective
successors. Nothing expressed or mentioned
36
37
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 10
and 11 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provisions herein
contained. It is understood and agreed that this Agreement is the exclusive
agreement among the parties, supersedes any prior Agreement among the parties
and may not be varied except by a writing signed by all parties.
SECTION 16. PARTIAL INVALIDITY. In the event that any term,
provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder
hereof and the application of said term, provision or covenant to any other
circumstance or situation shall not be affected thereby, and each term,
provision or covenant herein shall be valid and enforceable to the full extent
permitted by law.
SECTION 17. CONSTRUCTION. This Agreement shall be construed in
accordance with the laws of the State of New Jersey.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become
37
38
a binding agreement between you and us in accordance with its terms.
Very truly yours,
BROOKLYN HEIGHTS BANCORP
By:
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
President and Chief Executive
Officer
ATLANTIC LIBERTY, M.H.C.
By:
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
President and Chief Executive
Officer
ATLANTIC LIBERTY SAVINGS, F.A.
By:
----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
President and Chief Executive
Officer
The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set and above written.
▇▇▇▇, ▇▇▇▇ & CO., INC.
By:
----------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer
39
BROOKLYN HEIGHTS BANCORP
(A Federal Corporation)
Up to 529,000 Shares
(Par Value $1.00 Per Share)
SELECTED DEALERS' AGREEMENT
_______________, 1998
Ladies and Gentlemen:
We have agreed to assist Brooklyn Heights Bancorp (the "Holding
Company"), a federal corporation, and Atlantic Liberty Savings, F.A. ("Atlantic
Liberty" or the "Association"), a federally chartered mutual savings
association, in connection with the offer and sale by the Holding Company of up
to 529,000 shares of the common stock, $1.00 par value per share (the "Common
Stock"). Theses shares are to be issued in connection with the reorganization
of the Association from a mutual savings association to a stock savings
association and wholly owned subsidiary of the Holding Company (the
"Reorganization"), in accordance with the Plan of Reorganization from a Mutual
Savings Association to Mutual Holding Company and Agreement and Stock Issuance
Plan (the "Plan"). Under the Plan, the Holding Company will become, upon
consummation of the Reorganization, a majority-owned subsidiary of Atlantic
Liberty, M.H.C., a federally chartered mutual holding company. The offering
price per share of the Common Stock has been fixed at $10.00. The Common Stock
and certain of the terms on which it is being offered are more fully described
in the enclosed prospectus dated ______________, 1998 (the "Prospectus").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Prospectus.
In connection with the Reorganization, the Holding Company is offering
the Common Stock in a Subscription Offering to the Eligible Account Holders,
the ESOP, the Supplemental Eligible Account Holders and the Other Members. The
Holding Company is also offering all shares of Common Stock offered but not
subscribed for in the Subscription Offering in the Community Offering to
members of the general public, with preference given first to residents of
Brooklyn, New York. The Common Stock is also being offered in accordance with
the Plan by a selling group of broker-dealers in the Syndicated Community
Offering.
We are offering the selected dealers (of which you are one) the
opportunity to participate in the solicitation of offers to buy the Common
Stock and we will pay you a fee in the amount of _______ percent (______%) of
the dollar amount of the Common
1
40
Stock sold on behalf of the Holding Company by you, as evidenced by the
authorized designation of your firm on the order form or forms for such Common
Stock accompanying the funds transmitted for payment therefor to the special
account established by the Association for the purpose of holding such funds.
Any purchase of Common Stock made pursuant to this Agreement is subject to the
maximum purchase limitations provided for in the Plan and described in the
Prospectus. It is understood, of course, that payment of your fee will be made
to you directly by the Holding Company for the Common Stock sold on behalf of
the Holding Company by you, as evidenced in accordance with the preceding
sentence. As soon as practicable after the closing date of the Offering, the
Holding Company will remit to you the fees to which you are entitled hereunder.
Each order form for the purchase of Common Stock must set forth the
identity and address of each person to whom the certificates for such Common
Stock should be issued and delivered. Such order form should clearly identify
your firm. You shall instruct any subscriber who elects to send his order form
to you to make any accompanying check payable to the Association.
This offer is made subject to the terms and conditions herein set
forth and contained in the Plan and is made only to selected dealers who are
(i) members in good standing of the National Association of Securities Dealers,
Inc. (the "NASD") who are to comply with all applicable rules of the NASD,
including, without limitation, the NASD's Interpretation With Respect to
Free-Riding and Withholding and Section 24 of Article III of the NASD's Rules
of Fair Practice, or (ii) foreign dealers not eligible for membership in the
NASD who agree (A) not to sell any Common Stock within the United States, its
territories or possessions or to persons who are citizens thereof or resident
therein and (B) in making other sales to comply with the above-mentioned NASD
Interpretation, Sections 8, 24 and 36 of the above-mentioned Article III as if
they were NASD members and Section 25 of such Article III as it applies to
non-member brokers or dealers in a foreign country.
Orders for Common Stock will be strictly subject to confirmation and
we, acting on behalf of the Holding Company, reserve the right in our
uncontrolled discretion to reject any order in whole or in part, to accept or
reject orders in the order of their receipt or otherwise, and to allot.
Neither you nor any other person is authorized by the Holding Company or by us
to give any information or make any representations other than those contained
in the Prospectus in connection with the sale of any of the Common Stock. No
selected dealer is authorized to act as agent for us when soliciting offers to
buy the Common Stock from the public or otherwise. No selected dealer shall
engage in any stabilizing (as defined in Regulation M promulgated under the
Securities Exchange Act of 1934) with respect to the Common Stock during the
offering.
2
41
We and each selected dealer assisting in selling Common Stock pursuant
hereto agree to comply with the applicable requirements of the Securities
Exchange Act of 1934 and applicable state rules and regulations. In addition,
we and each selected dealer confirm that the Securities and Exchange Commission
interprets Rule 15c2-8 promulgated under the Securities Exchange Act of 1934 as
requiring that a Prospectus be supplied to each person who is expected to
receive a confirmation of sale 48 hours prior to delivery of such person's
order form.
We and each selected dealer within the meaning of Rule 15c3-1(a)(1)
further agree to the extent that our customers desire to pay for shares with
funds held by or to be deposited with us, in accordance with the interpretation
of the Securities and Exchange Commission of Rule 15c2-4 promulgated under the
Securities Exchange Act of 1934, either (a) upon receipt of an executed order
form or direction to execute an order form on behalf of a customer to forward
the offering price for the Common Stock ordered on or before twelve noon of the
business day following receipt or execution of an order form by us to the
Holding Company for deposit in a segregated account or (b) to solicit
indications of interest in which event (i) we will subsequently contact any
customer indicating interest to confirm the interest and give instructions to
execute and return an order form or to receive authorization to execute the
order form on the customer's behalf, (ii) we will mail acknowledgements of
receipt of orders to each customer confirming interest on the business day
following such confirmation, (iii) we will debit accounts of such customers on
the third business day (the "Debit Date") following receipt of the confirmation
referred to in (i), and (iv) we will forward completed order forms together
with such funds to the Holding Company on or before twelve noon on the next
business day following the Debit Date for deposit in a segregated account. We
and each selected dealer acknowledge that if the procedure in (b) is adopted,
our customers' funds are not required to be in their accounts until the Debit
Date.
Unless earlier terminated by us, this Agreement shall terminate upon
the closing date of the Offering. We may terminate this Agreement or any
provisions hereof at any time by written or telegraphic notice to you. Of
course, our obligations hereunder are subject to the successful completion of
the Offering.
You agree that at any time or times prior to the termination of this
Agreement you will, upon our request, report to us the number of shares of
Common Stock sold on behalf of the Holding Company by you under this Agreement.
We shall have full authority to take such actions as we may deem
advisable in respect of all matters pertaining to the offering. We shall be
under no liability to you except for lack
3
42
of good faith and for obligations expressly assumed by us in this Agreement.
Upon application to us, we will inform you as to the states in which
we believe the Common Stock has been qualified for sale under, or are exempt
from the requirements of, the respective blue sky laws of such states, but we
assume no responsibility or obligation as to your rights to sell Common Stock
in any state.
Additional copies of the Prospectus and any supplements thereto will
be supplied in reasonable quantities upon request.
Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned, or telegraphed to you at the address to which this
Agreement is mailed.
This Agreement shall be construed in accordance with the laws of the
State of New Jersey.
Please confirm your agreement hereto by signing and returning the
confirmation accompanying this letter at once to us at ▇▇▇▇, ▇▇▇▇ & Co., Inc.,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. The enclosed duplicate copy
will evidence the agreement between us.
▇▇▇▇, ▇▇▇▇ & CO., INC.
By:
-------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive
Officer
Agreed and accepted as of ________________, 1998
------------------------------
By:
-------------------------
4